The acquiring company's basis in the stock of the acquired company is equal to the basis that the shareholder's had in their stock. In order to satisfy the expenses of an acquisition, an acquiring company may use a combination of 2 for 3 stock-for-stock exchange with shareholders of the target company and a tender offer of cash. Where possible, grantees often take advantage of a stock-for-stock exchange, as they usually increase a grantee's ownership position and require no cash outlay. Non-employee shareholders argue that stock-for-stock option price satisfaction adds to the already high expense of granting employees options, as the employees end up not having to pay the option price, which can add up to be a significant amount of cash if all employees granted options take advantage of stock-for-stock
These prospectors needed picks, axes and other supplies to mine for gold. Those who were in the business of selling supplies to these prospectors faired better during the gold rush then the prospectors did. The demand for picks and axes was derived, to a large degree, from the demand for gold at that time. The key is the change in the price of the final product brought about by the shift in demand for it. If the demand curve for picks and axes shifts to the right and the upwardly sloping supply curve remains unchanged, then the equilibrium price and quantity in the picks and axes market will
A merger would best be used in this situation since it will help lower his taxable income and he can improve his operations and competitiveness. If he feels that the investment in new manufacturing equipment will help increase profits and can take on the extra liability, then he should buy Smithon. His debt –to-equity ratio will rise and may cause him to have a hard time getting money to finance his company. But with a two year loss he is keeping his taxable income down and may be able to show investors that things are going to turn around when all operations are working together and
Jones purchase the stock of Smithon outright leaving Smithon intact? The stock should not be purchase by Mr. Jones. Mr. Jones acquiring the assets, liabilities and also would inherit the contractual obligations of the selling corporation, would, be the results of the purchase. In lay terms, he has bought the existing Smithon Corporation and he is responsible of ensuring daily operations run efficiently but the tax aspect of acquisition he is responsible for existing and any future tax liabilities that the selling corporation had. It would be my advice for Mr. Jones to not buy the stock because of the liability of current and future tax obligations which Mr. Jones would incur from the purchase of the stock.
A firm’s value depends on the positive net income generated in the past. True False A firm’s value depends on the firm’s ability to generate positive cash flows now and in the future True False When determining the value of a firm, which of the following statements is true? • Inversters are risk neutral. Other things equal they prefer to pay more stocks that are less risky and have uncertain cash flows • Investers love risk. Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows.
Investors find this information lucrative because the more expendable cash a company has the more likely they are to pay out in dividends for the stock holders.. Liquidity Ratios: Current assets are a business's total current assets divided by its total current liabilities. Total Current Asset / Total Current liabilities 1,971,000 / 116,290 16.949 = 16.9 Current Ratio- 16.9:1 or 17:1 (16.9 to 1 or 17 to
Incentives are rewards that are linked to >specific long-term goals of the organization. The most common long-term incentive is the stock option, which either gives the executive free company stock, or allows him or her to purchase company stock at a reduced price for a period of time. These stocks become more valuable as the company improves financially, and therefore, ownership of stock is intended to encourage the executive to make the organization more profitable. Executives can then sell these stocks at a later time when they have appreciated in value, therefore providing compensation beyond the employee's tenure with the organization. Recent news stories detailing company failures in which unethical accounting practices and artificial inflation of stock prices caused lower-level employees to lose investments in company stock have raised concerns about the ethics of granting large numbers of stock options to
This program will keep track of individual customers purchasing behaviors, which will allow Kudler to know how much of a certain product to stock. This could also determine manpower needs for certain days of the week. Just by increasing efficiency on these two topics will increase revenue by cutting out under or overstocking as well as overstaffing. This program may also increase the number of loyal
Company G has prided itself on cultivating relationships with it's suppliers built on honesty, confidence, and allegiance in order to facilitate profits for both parties. However, as popularity may grow for the product so too may the market and suppliers might consider increasing costs, in which case a fixed contract would be discussed. Threat from Substitutes – If the Little Wonder does prosper their may be threats from substitutes from larger companies that are able to produce a similar product on an increased scale thereby reducing it's price and making it difficult for Company G to compete. SWOT Analysis A SWOT analysis has been done for Company G and the outcome is clearly positive. The details of that evaluation: STRENGTHS Dedication from management, employees, and suppliers 1.
The reason organisation needs to control their costs properly would be that it would end up saving money on expenses and increase its revenue. This will help the company to increase its revenues and this would allow the company to invest more money if required. For example, the business should control its costs so that it saves money and by having the right amount of stock the business can then have the full benefits of selling those stocks and receiving cash which could be used for other areas of the business. In a business organisation, a budget represents an estimate of future costs and